Fragile?
We basically locked people in their homes. Shut down every imaginable business except those deemed "essential". Closed all retail and restaurants.
What would you expect to happen?
We basically locked people in their homes. Shut down every imaginable business except those deemed "essential". Closed all retail and restaurants.
What would you expect to happen?
This isn't just about big business. Small businesses notoriously operate on very thin margins. Though that's not necessarily because of debt, but because what it takes to run a business today takes a considerable amount of overhead.
I know that the idea of saving money seems cliche, like some obsolete thing your grandpa might say, but we're going to have to wake up to the fact that if we want to finance everything with debt then we're going to be penalized every 10 years when there's an adjustment or a catastrophe that forces one.
The catch 22 there is that using less debt also means less growth, and we've all gotten used to unprecedented amounts of growth.
With the amount we pay in taxes, the ability to save is sharply limited.
Compared with, say, contributing to the construction of a resilient, humane society in a variety of ways (including paying taxes) and being ready to deal with semi-random catastrophes quite well.
Oh, also: the amount we pay in taxes, as a percentage of personal and corporate income, as well as GDP, is at a (near) historical and cross-country-comparative low.
Now, it's true that the commercial (retail) real estate "sector" has created a more flexible and dynamic space for retail to operate in. Sign leases for just a year in case the idea doesn't work out etc. etc.
But it has also meant (1) a more encouraging environment for retail ideas that are even more likely to fail than the average (2) when business drops (e.g. covid-19), there's still the rent to pay.
It is true that in the past, the retail store owner-operator probably didn't own the premises outright, so there's still the mortgage payment when business drops. But that was (then) an arrangement with a bank (often local) who were going to be much more likely to see the mutual benefit of finding a way to not reposess the building.
This is just another small contributing factor to the overall fragility.
When times are good, corporations are essentially making monthly payments to a bunch of local landlords (or banks) for the service of housing their employees.
I do find it a little strange that we didn't try to stick landlords and lenders with more of the bill. It'd be easier for corporations to keep employees staffed if they could reduce their salaries because their rent / mortgage payments were lower.
We really aren't. Between government pension plans, unemployment insurance, and all the welfare programs, I would challenge whether this is a real expectation at this point.
If the stimulus bill had gone directly to that, then this might have made a lot more sense.
Forget UBI, the trillion dollars in PPP, if it was put into people's checking accounts as a reverse payroll tax might have had a very different (& aligned with consumerist values) economic result.
As in, take the "employee as a cost" out of the employer's books & turn every extra employee just extra hands to work at your business, just paid for by the negative taxes (this punishes the under-the-table payment tax dodges directly).
The fact that they gave PPP, without actually putting money into a paycheck absolutely sucked if your goal was to stop the money from slowing down in the economy.
A dollar I spend turns into many more dollars spent, than a dollar I saved.
But if I know I'm out on the street once that number drops to 0, I won't spend right now, even if it is a necessary purchase.